After some unusual price swings last week, GBP/USD has had a slow start to the week thus far. Yesterday, the pair briefly pierced below last week’s lows to trade at levels not seen since the middle of the month. However, downside pressure was lacking and the pair is seen recovering on the back of some dollar weakness.
Last week’s Brexit talks ended in a stalemate once again. The EU is looking for the UK to give up control over British waters which the UK is not willing to concede. Talks are expected to resume next week. The prospects of a deal being reached anytime soon appear low as the same issue has caused a deadlock for a few months now.
The upward momentum in Sterling versus the dollar, similar to other major currencies, has slowed notably in August. This same trend may continue this week as we close out the month.
The economic calendar is relatively light this week. The Jackson Hole Symposium takes place on Thursday. This event has not always had a consistent impact on the markets and it remains to be seen if it will cause some volatility.
GBP/USD has spent most of the month between 1.3000 and 1.3200. This broader range is likely to stay intact in the absence of a fundamental catalyst.
The exchange rate was last seen testing minor resistance at 1.3120. A rally above it could lead to an extension higher to a more notable resistance level at 1.3170. The latter level held the pair lower in late July and early August.
To the downside, initial support comes from the lower bound of a rising trend channel. Stronger support is seen at a horizontal level at 1.3020 as this level has held several declines earlier in the month.
- GBP/USD has held in a narrow range for the past three weeks and looks set to continue the pattern.
- Sellers may look to step in on rallies to 1.3170 while buyers are likely to be found at 1.3020.
For a look at all of today’s economic events, check out our economic calendar.